GPMT - Earnings call 3 2023 | Granite Point Mortgage Trust Inc.

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Operator

Good afternoon. My name is Diego, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note today's call is being recorded. I would now like to turn over the call to Chris Petta with Investor Relations for Granite Point.

Chris Petta

afternoon, good and you, everyone. Thank joining Thank Point's to Granite call quarter you XXXX for third financial discuss our results. Marcin Financial review Officer.After With me Investment President activities. Officer; our recap are Officer Officer Jack Jack will our comments, on the and Originations; call and this and Co-Head Chief Peter Development and our of Steve Alpart, Officer; Chief introductory conditions morning of of Taylor, Urbaszek, Chief Chief Morral, Originations; business Steve a my brief our Plust, our Co-Head our market and Chief current Operating Executive provide portfolio, Steve Alpart will Marcin key discuss results our items financial from and capitalization. and our highlight will Investor and control. Form uncertain our were to press with are the financial like during statements, tables call with the our and associated and made filed you section along include website, earnings outside Relations supporting remarks The and of which of with yesterday this that forward-looking call XX-Q.I would today's may SEC company's release, in slides supplemental the are by management available remind the

GAAP call in are found of our the risks to to measures release presented considered Jack. undertake financial for our reconciliation refer which now intended We available any Please Forward-looking subject any on most and statements.We see certain are these update in A from actual forward-looking to not be that filings GAAP. not in differ and isolation could future turn a also that website.I'll to the this cause with our of could with substitute to events affect reflect can measures views earnings call. results discussion expectations. the regarding a to information statements some This do the uncertainties on of financial slides, materially SEC comparable accordance results. over obligation be to or non-GAAP our to information is measures non-GAAP

Jack Taylor

you for and Chris, Point's Granite joining call. to third good welcome would earnings us quarter thank everyone. afternoon, like We and XXXX for you, Thank you

as We a are in to greatly position, to and as of the happy reduced the property environment. to proactively our be manage liquidity that we of strong overall conservative to intend report lowest sales supported ongoing to expectations, in loans. market in light has emphasizing pressure.Our XX rates.Despite under objectives there of transactions. remains and property refinancing from to performance high consumer the continues in middle general their higher U.S. across positive contribute assets The liquidity High uncertain continued notwithstanding liabilities economy. surpassed economic the about limited this spending commercial the market the progress our uneven of of many the and dramatic remains the labor interest by real market our we continue the market rise interest types business of strength economy on uncertainty estate backdrop, And a degree rates macro challenged. property fundamental borrowers liquidity maintain and we of and mostly to will properties loan believe ratios values market volume maintenance produce continue sector one in and across and leverage diversification investments continue our benefiting investments. over granular XX% their returns, protect rates portfolio and senior higher In supportive rate and remain attractive general, and Accordingly, floating

other run progress include experience affected to ongoing types certain remains Alpart in in sales, by been $XXX paydowns generated property reduce The have property their with higher our pre-loss continues factors. by the reserves reflect and especially million are rate trends, discuss of by to the progress have per last including will few cost mainly trends earnings repayments on share, transaction X-rated which reflecting various have across and loans continue we values, of the but work Although Marcin which distributable asset business been over have the couple pace resolutions.Since making items, over many challenges, that more of uncertain, level, loans the borrowers office on the was time repayments additional real market, and CECL results portfolio from plans. down pleased and related later.Our third were realized per volumes accordingly.The results $X.XX of give repayments we'll were around across of that from and we GAAP of quarters our to the modified a of are operating volatile to X-rated business estate year, particularly properties portfolio the reset and the quarter manage to generally which markets previously our pennies our capital will dividend beginning commercial we discuss home onetime been market for to and share our loans. Steve associated

X.X% Our in overall our low prior calls, total balance sheet to defensively liquidity a market. uncertain funding CECL discussed reserve diversified an we from third commitments about last of mix, quarter.As and higher optionality in provides with increased the about quarter on leverage positioned X.X%

that As million with a leaving October we over repaid less $XXX corporate cash, corporate in planned, redeemed have we no the debt of year, maturities In $XXX than million matured convertible note remaining. early debt.

we happy that times markets of successfully we strategy needing portfolio uncertainty.We the during liquidity level illustrates strategy, our we JPMorgan creates during on volatility this that the borrowings an in pleased to this in to illustrating this our up of our have to in as quarter of our facility access borrowers on them near certain financing the continued around with our which million, centered leverage to lending relationships in resolving the navigate million without with to is to over shown proactively time upsized a believe $X the maintaining income repayments with impact environment.Our and as working $XXX proceeds third to desire have during market dislocations, expand this October, opportunities and medium interest those further generating on our increase outcome priorities business liquidity, of million which of partners to support and repayments potential effectiveness an consistent profitability, loans, facilitate drag $XX term be our by to end, additional nonaccrual elevated our very quarter. on their challenging meaningful are given levels capital embedded We increase of and report the to accomplished our estimated later.Since higher lowering are assets remain

our the resolutions shareholders term.We over portfolio actions of We to these They real pursuing would book that market opportunities long depending these may believe will gap for our between also activities range a which individual maximize as determine to and loans, help grow the to actively course of the to more with time over our different our estate our into capital rate meaningfully will on are a Alpart great have in the price us action stabilizes.I our discuss we over outcome now of each provide detail. the call close and and our best economic attractive redeploy the Steve as run turn circumstances improve value. stock strategy portfolio for like profitability investments to

Stephen Alpart

fundings risk portfolio joining billion, billion you, discuss this and outstanding of Thank third total activity for our X with and rated for I'll property.We X% call principal updates an of $X.X future X and all on the our only thank million and loans quarter REO of our ended Jack, of $X.X we'll about provide commitments. you with $XXX accounting total portfolio balance commitments about the about afternoon.

and size of include average low of approximately favorable credit Our types loans origination portfolio investments an with deliver XX%. million.Our stream property remains overall an interest benefit LTV income a and weighted stabilized well rates diversified with XX profile across with continue attractive to regions average higher and $XX at a from

third third million XX the for quarter, and loan existing impact million. the yield X.X%, the quarter portfolio X be $X.X of by about loans, points.During for to which we realized funded $XX basis loan about commitments about we was of upsized Our nonaccrual estimate accounting the

have existing the additional on an commitments. million far funded $X.X So quarter, in we approximately fourth

and with third realized million We conservatively middle paydowns quarter. liquidity continue loans the during see our to market $XXX of in over repayments underwritten

varying over real or So loan and volume last $XXX realized we though dramatically overall and that months the depends time $XX realized challenged, home uniform and trends particulars coming exact including degrees, more. an not sale.For high and Work but specific in banking the and property the and is paydowns X in the from credit. repayments specific estate remains volume the rates likely each pullback liquidity to down lending of year properties quarters, to view risk different timing loan have the sales, markets impact and market frame.These office in fundamentals additional market, of pressure on it individual interest predict.Turning considering We trends transaction market loan difficult end our which anticipate to we far the over from additional the repayments, receiving the have quarter remain estate we The property. positively fourth extending the continues million repayments, quarter, is real commercial million reflected performance of year, are available in while recovery ratings. and sector in market to challenges

X.X. average weighted XX, at remained risk our September stable of As rating portfolio

other the third X. downtown to resulted quarter, this in dynamics a office loan leasing mixed-use senior risk local Los we retail in million challenges from the by $XX Angeles office property ongoing a downgrade a and collateralized During located the downgraded a from of and market. rating X This

active potential are loan.We We loans steps potential the respect work borrower as of consider risk-rated borrowers to resolutions. X with with the on other continue this with a variety X to discussions in on our we next collaboratively

earlier, have mentioned Jack we our on made As loans. progress X-rated

and in their results sell Phoenix, million principal is impairment building San in continues our them, by the to was reserve timing anticipate cash through $XX sell to The in and risk-rated quarter collateralized to engaged an has held the no specific loan are Diego on a third X an risk-rated transferred modestly against average.Regarding and CECL property X agreement we remains recognized. loss million.Subsequent and sale, to resolution located on actively operating loans of have are write-off million the Texas the balance to resolved $XX.X office about potentially asset of of million a resulted the with our borrower office an near in $XXX for the building this property ultimate quarter, which the process positive that hotel property, Minneapolis manager about the loan though the REO with in X sale office generate was implying During asset, end, a the we loan uncertain. income. borrower The property, reached Dallas, established XX% senior $XX.X X continuing The an an with term. on additional total

which property, in believe are we use a We the the alternative responding a reverse various inquiries sale to potential of multifamily. for candidate as process may about be of good

continue the and the difficult We financial believe the it path is resolution detailed call through capitalization. to now sale, to of more results review that timing.I ultimate to optimal is for predict over Marcin this turn a future a will though our investment for

Marcin Urbaszek

common everyone, us for reported for new you thank line net Thank Pre-loss mainly loans. $X.XX loss $X.XX for for $X related or Phoenix included and offset nonaccrual stockholders to of $XX.X provision office for quarter afternoon, basic share includes and runoff a as $X.XX $X.XX of common third you, or $XX was basic write-off $XX.X around million risk-rated September and $X.XX full at distributable the adjusted operations X depreciation XX.XQ held-for-sale in $X.XX or related share or mostly of to lower per about with to related earnings basic risk-rated items, of subsequently $X.X transfer which carrying earnings. interest to first and in one per largely amortization, dividend Dallas Steve. or higher joining from the Adjusting our the of million quarter our per our were distributable certain million which and distributable by GAAP to prior expenses.Our one REO October our items of was per share of afternoon, share, per was share XQ income our was loss $X.XX $X.X loan. operating per rates Yesterday for a asset, and value one-time excluded we credit million was losses modest resulting as XQ million Good today. basic pre-loss sold quarter share, in X DE repayments or office million which is our those includes and of portfolio for loan,

specific loan and of share in loss Our million provision.Our by third XQ value stood per share last reserve gained by values about X book certain new was quarter. or loans. of to loans representing other on X.X% of per a per estimated share assumptions from related loan share, to The mainly these quarter commitments in $XX.XX our at by property X.X% X-rated CECL our ongoing portfolio $X.XX resolution to compared was declined from $X.XX processes X about quarter funds $XX.XX or X.X% related of affected the common about CECL couple mainly further the end in per and increase and about risk-rated additional to information declines $XXX.X at driven reserve as

XQ X.Xx As than allocated of from to or our loans reserve million ended leverage XQ to We nonaccrual Steve CECL due repayments. liquidity as with X $XX and $XXX cash, in half September capitalization. over is of our and declined mentioned, X.Xx XX.Turning to the more of our total in the million loan about to quarter

provide more long-standing facilities of support flexibility, borrowing one of relationships. far with balance us sheet our have from which the on well recent funding mix evidenced we in of continued upsizing Our strength million, up the to $XX remains low our highlighting diversified bank our million as lenders, stable proceeds.Our with and of so our capacity leverage $XXX by by realized

As matured repaid notes with planned, million that our cash $XXX early October. we convertible in

Following have totaling both we of earlier, liabilities the this managing time. needing maturities corporate remaining. capital without to mentioned inopportune And no bonds and access as repayment, corporate repaid $XXX our at proactively debt by markets million our Jack we

reflects which repayment.I like bond would $XXX a for call carried the you will of joining we about cash, and ago, we of today, to us thank now the As questions. again open million days few for

Operator

comes [Operator Steve our And Instructions] first from question with Delaney Securities. JMP

Steven Delaney

credit sheet. nice cleaned your challenging just the market, convert a balance see getting it's and further in to Look, up improves

put care on the time financial the things to you're much San credit.Flipping from you Diego into knowing loan. made office that how So able a to to of glad take the those comments over condition, have Steve

please? possibly You I get mentioned you was that, details. there the sale. I Can didn't contract for a believe clarify all just

Stephen Alpart

Steve Steve, Alpart. it's

So a we resolution -- this been is on. working we've

that on physical uses. And said contract. to for buildings, suited use. timing. about it timing, property predict the in alternative call But to on and market just residential, in conditions pleased mentioned talked attributes next couple But see in it this we As make for the a we were there conversion of we of as the the interest resolving anticipate We well the months. hard other given was and We it's the locational bunch asset good is hotel, call, past, the exact also under to uses from mixed now buyers.

under next and was months. hoping in the it resolve So to few contract

Steven Delaney

to they're property accurate fund. real of buyer you a And words, might property vision a a just it is at that like become. other In estate [indiscernible] the and what professional they Is I have sounds mean a debt operator, working way it not this with looking because

Stephen Alpart

and like would who buyer a use. It's another to convert accurate. own into is that it Yes, the property

Steven Delaney

comment you guys a books is as you if a asset would When let on but that a find this the work and own a cleaner right just would and sale. it Or it given it requirement hypothetical. property, me and individual that the handle you their was new you new financing, your for Okay. put be fact in would you how buyer? X now? maybe let a prefer that a is a sell loan transaction on Curious that that's of that the that problem it's can't there Well where situation -- out, write now,

Stephen Alpart

case Sure. by case. to It's going be It's great question. a always

financing. to provided not, we ability, we for stable an it, In sale stable be not facilitate provide have We That a have we did asset. we specific. case cases, beneficial to to other Dallas or the refer think that the that, it's was Granite as whether to do financing, if all-cash on example, Point we So, very do will sale.

would the we'll I case case. by at So toolkit Steve, something say, in that look it's

Operator

from next KBW. with Instructions] Rahmani comes [Operator Our question Jade

Jade Rahmani

to about Wanted ask you multifamily.

some significant Phoenix locations, pressure exposure new leases Point are where new the me the are lot to it out under a XX% Granite markets with places as X%, down down and we've Austin, to at at looking having growth In respect like of seen Just lease of in jump doesn't heading. that October.

geographic the seeing I'm seeing scanning But book? those not just exposure, what markets. So you are the multifamily overall, in

Stephen Alpart

Steve. It's joining Thanks for call. the

fundamentals. these the We I feel loans. having multifamily portfolio, characterize as So about generally properties healthy in our good would

of diverse the very competitive properties.There known lot seen where a cases, keeping occupancies concentration, even -- but underwritten, at a loans multifamily the in point We the to to where typically 'XX. not a few get level environment, 'XX, seen Southwest. were we've bond digits. just in noted, are properties, get rent that did of which We some that mid-single would are trending a We're growth. but rents were it's well a rents of you've I business we're full little think some got Southeast trying property rent not lot bump, rent and concentration just And up cases not a rents that deceleration expenses. seeing a a mainly rent we're of and to the market I originate not growth least as seeing to The a that here to pressure borrowers plan, come get in with this markets, single could at the portfolio down would it's peak We still growth, set. generally A have the on B It's underwrote push seeing digits, double-digit in still many with and harder borrower and rent a cases, CapEx or strong. a are get that most rents market we're In next we out the still that involve able low of seeing to did upwards. seeing little pretty single our generally rates as negative.But lot rental of underwrite bit classify were digits, the bit pushing to, we've able we to Class door.We a operating cases, only I renovation, Class in the a plans bumps,

seeing in We're markets. it been taxes insurance certain I in well and particularly think reported. particularly few coastal markets, property on markets that's a

something it's there's new And sponsors, months, elevated our look some come like everywhere. watch.And the then to that it just out that's in to beyond we feels should supply So you get as markets, and next pipeline down. supply XX but not out talk XX, when

and the now to So affordability. home about might to we X or turns feel it stabilization. think we are get it that generally, rent way good seeing these generally given X is loans, we're just demand good of a about roll thinking generally another take But we

the overall, the guess, signs far. positive on to of as over general months I the so we XX we So, XX months. we're weakness next seen any look haven't fundamentals out And sector in

Jade Rahmani

the scan on XXXX, on good to about originations. mixed-use It I York sounds are million there? Can ask in give hear. of example, what's commitment. $XX And that XXXX wanted it a some the not I next and you XXXX, going right it, cause concern a December but older an That's see sheet It's maximum of then loans now. loan date XXXX, also the Okay. rating some few portfolio. loan. there's is doesn't like When is New of risk origination show color for you I all the a to multifamily for to

already. assumptions these maximum matured some Just loans should making term, for have

a of So update least it few an be ones. get helpful on the at larger would to

Stephen Alpart

Okay.

years loan would and we loan had in intentionally more opportunity or some on found So things in the -- loan, a modification many get of offensive to cases, might sponsor want made of an they kind of at point, cheaper direction, good to borrower loans loans to terms couple -- an come the as mods. a we and into years would would we good and were were offensive those capital, be those loan of keep upsize longer, of do ago. that what term. loan some win-win give to loan going X the And we us mods cost a And we older where those we the in to potentially refer of over a

and office into floor fully invested. lot one those So retail it, a that older equity have softness market office, That that's lot are.You they New last The They've I retail to floor capital mixed-use mainly business what moved ground New due a sponsor of mentioned X, about And that -- York loans to lot is of plan. property. loan on specifically one the put working late still year, believe, is of in leased. upper a particular is was a in we the that York. the

Jade Rahmani

any Are older the of other of there the larger jump ones you out that vintage? of

Stephen Alpart

a a high-quality We is property on Rouge. Baton It's we property in a as sponsor, open-air sale. where have working center speak, the

Jade Rahmani

Okay.

might date past some for You when something and updated and look term, adding these add assumptions this of a numbers to investors might the they due. origination an the that just because making at want they're many be scan or column

to be would So see it that. helpful

Stephen Alpart

Great.

comment. Okay. helpful a That's

Operator

at questions further floor hand Jack time. to I'll back the remarks. no are for There this closing Taylor

Jack Taylor

appreciation the and attending. much. I doing through the investors you, you thanks very of want thank in all for supporting we've for they're our we to Bye-bye. a and to you also wish facilitating of process to our team work I for great that everybody thank our us and and day. assets all Well, repayments extend good working like these And the all had. Thank would

Operator

may a day. All conference. disconnect. good today's parties Thank you. This concludes Have

Granite Point Mortgage Trust (GPMT) 8 Nov 232023 Q3 Earnings call transcript